4. NEWS

To maximize impact against HIV, TB, and malaria is one of the four objectives of the new Strategy 2017-2022. The Global Fund says that this objective will focus both on high burden/low income countries and vulnerable populations.

5. NEWS

In its annual “opinion” on governance, risk management and internal controls of The Global Fund, the Office of the Inspector General said that although there has been steady progress in organizational maturity, many issues remain. The Board registered concern about these issues, and tasked the Secretariat with developing a detailed action plan to advance risk management and internal controls.

6. NEWS and ANALYSIS

Although the topic was not on the official agenda of the Board meeting in Abidjan on 26-27 April, there was considerable discussion about performance and risk in the Nigeria portfolio of grants. A report on an audit of Nigeria grants by the Office of the Inspector General is expected to be released shortly.

9. NEWS

Challenging operating environments account for a third of the global disease burden for HIV, TB, and malaria, and a third of Global Fund investments. The Board has adopted a policy to cover how the Fund will work in these environments. The Secretariat will develop an operational framework to implement the policy.

10. NEWS

The Global Fund has failed to meeting four 2015 key performance indicator targets and will likely miss its 2016 target on health systems strengthening. However, the other eight KPIs show strong performance. Attention is shifting to the proposed new KPI framework which will be presented to the Board shortly.

Board approves allocations methodology for 2017-2019

2. NEWS

28 Apr 2016

Author:

David Garmaise

Changes from previous methodology are not significant

The Board has approved a methodology for determining the allocations for 2017-2019. The methodology does not differ significantly from the one used for the 2014-2016 allocations. The main differences are as follows:

There will be no country bands (or country groups of any kind) used.

No specific sum of money has been set aside for incentive funding or for regional proposals (though there will be funding available for both as part of a new pot of money for “catalytic investments”).

The qualitative adjustment for minimum required level will be replaced by a simplified system.

A simplified system will be used to identify initiatives to be placed on the Unfunded Quality Demand register.

As it did in 2014-2016, The Global Fund will determine the amount available for allocation to countries based on how much money was raised in the Fifth Replenishment minus the funds required to cover the Fund’s operating costs. As before, an amount of money ($800 million) will be reserved for special initiatives, except that this time they are being called “catalytic investments.” All remaining funds will be used for allocations to countries.

Catalytic investments

The catalytic investments will serve three purposes: (1) to provide a form of incentive (“beyond allocation”) funding; (2) to fund multi-country approaches; and (3) to fund strategic initiatives.

The beyond allocation funding will be used to push countries to “prioritize and direct country allocations towards key epidemiological and context-specific challenges to addressing the three diseases and build resilient and sustainable systems for health.” The Global Fund says that the approaches used to respond to these priorities should be driven bottom-up by countries rather than dictated by the Global Fund. But is also says that the priorities will be determined through consultations with relevant technical and community partners “to ensure funding is prioritized according to critical strategic needs and that applications are not burdensome to countries.” One aim of these funds will be to promote programming for key and vulnerable populations.

The idea is that any above allocation funds used for this purpose would have to be matched by funding from the country’s allocation.

Some of the $800 million will be used to target key, strategic multi-country priorities deemed critical to meet the aims of the 2017-2022 Strategy and in line with global disease priorities. The Global Fund will identify a limited number of priority approaches prior to the 2017-2019 allocation period, and applications will be actively sought to meet these aims. Examples of initiatives that could be funded include cross-border and regional programs for key and vulnerable populations; activities addressing human rights barriers to services; harm reduction; and activities addressing malaria drug resistance and elimination.

The Global Fund says that some of the current strategic initiatives may continue to receive funding. This could include the Emergency Fund and Community, Rights and Gender activities.

At its June 2016 meeting, the Strategy Committee will recommend to the Board a package of initiatives that could be funded as catalytic investments. Once the package is approved, the Strategy Committee will have the flexibility to move funding among the various initiatives.

(GFO has learned that of the $800 million for catalytic funding, $300 million will be set aside for multi-country proposals, regional proposals and special initiatives. This would leave $500 million for beyond allocation funding.)

Determining the country allocations

Once the amount of money available for country allocations is known, the allocations model will be applied. As before, the funds will first be divided into three envelopes, one for each disease, as per the global disease split. The Board already decided that the split for 2017-2019 will be the same as the split used for the 2014-2016 allocations: HIV 50%; malaria 32%; and TB 18%.

Once the global amounts for each disease are known, the income/burden formula is applied to determine how much each country should notionally receive for each disease. (The technical parameters to be used for the disease/burden formula were approved by the Strategy, Investment and Impact Committee in March 2016. The parameters are listed in an annex to the Board paper on the allocation methodology.)

Then, as was the case for the 2014-2016 allocations, a series of qualitative adjustments will be applied.

For the 2014-2016 allocations, one particular qualitative adjustment – the minimum required level (MRL) – caused a lot of problems, the main one being that some high burden countries ended up with an allocation that was significantly lower than what the income/burden formula said they should receive. In these countries, three years’ worth of funding had to be stretched to four.

For 2017-2019, the MRL will be replaced by an approach that uses up to $800 million to “even out” the imbalances created by the MRL. (Note: This is not the same $800 million that has been set aside for catalytic investments. It is easy to get confused.) The Global Fund said that this approach is expected to result in components whose previous funding levels were below what the income/burden formula said they should receive being scaled up by at least 50% towards the initial formula-calculated amounts.

If the funds set aside aside for this rebalancing are insufficient, the Secretariat will have the flexibility to re-direct money from the $800 million for catalytic investments.

The other qualitative adjustments that will be applied have not been determined yet. They may include major sources of external financing; willingness to pay; past program performance and absorptive capacity; risk; minimum funding levels; and increasing rates of new infections in lower prevalence countries. They may also include an adjustment for populations disproportionately affected by HIV and TB, and in low endemicity malaria settings. This last factor is new; it was not one of the adjustments used in the 2014-2016 allocations.

The Board has agreed to adopt a qualitative adjustment process that is more transparent, accountable and flexible than what was used for the 2014-2016 allocations. The process will work as follows:

Prior to each allocation period, the Strategy Committee will approve the list of qualitative factors and the process for applying them;

the Strategy Committee will oversee the adjustment process carried out by the Secretariat; and

country components whose allocations changed by greater than 15% and greater than $5 million through qualitative adjustments will be reported by the Strategy Committee to the Board.

For the 2017-2019 allocation period, the Strategy Committee will review and approve the list of qualitative factors and the process for applying them at its June 2016 meeting.

Unfunded quality demand

For 2017-2019, a simplified process will be used to identify unfunded quality demand. Applicants will no longer be asked to prepare allocation and above-allocation portions of their concept notes. Instead, costed national strategic plans and/or programmatic and financial gap tables in the concept notes will serve as the basis for estimating beyond-allocation need. During development of the funding request, a limited set of key additional, prioritized and costed needs will be identified for programming, should resources become available. These needs will be reviewed and registered at the time of initial submission of a funding request and maintained on a register to attract additional resources, and to facilitate reprogramming of savings or efficiencies during the grant lifecycle.

Reaction

In a letter to the Global Fund Board and Secretariat, Dr Bart Janssens, Director Operations for Medecins Sans Frontières, expressed concern that the changes to the allocations methodology will move the Fund even closer towards a formula-driven allocation increasingly based on disease burden and a country’s economic classification. While this model can be expected to significantly increase funding in a few countries with the highest disease burden, Janssens said, “its consequences for a large number of countries with lower prevalence and/or concentrated epidemics remain unclear and unpredictable…. People living with HIV and TB in these contexts face the risk of significant reductions of the resources needed for an accelerated disease response.”